Biden’s Department of Education Approves Student Loan Cancellations for More than 1,800 defrauded borrowers

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Today Department of Education (department) announced that it approves over 1,800 loan forgiveness applications for student borrowers who attended three different schools. Borrowers will be paid 100 percent of the loans and receive approximately $ 55.6 million in student debt cancellation.

The Biden administration uses a “borrower protection before repayment” rule, also known as “borrower protection,” to provide such forgiveness. Under Higher Education LawThe Minister of Education has the power to pay off the debt of borrowers who have been cheated or cheated by their college or university.

The Borrower Protection Statement is an important Department tool for protecting borrowers from having to pay off debts that must be forgiven due to the actions of predatory colleges. The ordinance directs the Secretary of Education to pay off federal student loan debt in cases of college misconduct. Although this regulation has existed since 1994, and since then the right to borrower protection has been spelled out in every federal borrower’s direct loan bill, its wider use has been driven by one catastrophic event: the collapse of Corinthian Colleges, Inc. in 2015, a great-for-profit college network with a history of fraud and misconduct against its students.

The colleges mentioned in today’s announcement are Westwood College, Marinello Schools of Beauty, and the Forensic Reporting Institute. Each of these schools has a troubling history and are all business colleges.

According to the Department, Westwood College “has been involved in widespread perceptions about students’ ability to transfer loans.” In addition, the college has made “widespread and significant misstatements” about the quality and career prospects of its criminal justice programs, which are common in commercial colleges as they transitioned from their historical foundation of technical education to more traditional higher education programs. (Read more about this in Lower Ed, Tressy McMillin Cottom, Ph.D..) Westwood accounts for the vast majority of approved applications, resulting in approximately $ 53 million in debt relief and 1,600 applications.

The department had similar alarming results for the Marinello beauty schools from 2009 until their closure in 2016. The department found that the cosmetology school kept students without instructors for weeks or months, leaving students without proper preparation to take licensed tests. More than 200 claims have been approved, of which about $ 2.2 million have been canceled. At least three commercial college students have already received loan payments for falsely certifying a student’s eligibility for student aid after Lawsuit against the Department for 2018 under the leadership of then Secretary of State Betsy DeVos.

Marinello Schools of Beauty was sued under the False Claims Act in 2013 and ultimately settled with the Justice Department in 2016 for more than 8.6 million dollars… After The department refused to recertify participate in federal student assistance programs, rendering him unable to survive given his dependence on students using federal student loans and grants to pay for their tuition. According to a settlement press release, the US Attorney for the Southern District of California said the school “manipulated the system to fraudulently obtain student assistance funds without which the school could not function.”

Finally, the Judicial Reporting Institute. The department found that from 1998 until its closure in 2006, the school misrepresented the time it took to complete the court communications program, with the result that very few students completed the program. Fewer than six percent of the students actually graduated, and some of them took much longer to complete as they were told. The Court Accountability Institute provided a small portion of the forgiveness: 18 lawsuits and about $ 340,000 in student debt relief.

Today’s announcement comes following several actions by the Department under President Joe Biden and Secretary of State Miguel Cardona to assist borrowers. The Biden administration has reportedly canceled more than $ 1.5 billion, or nearly 92,000 borrowers. In March, the department optimized the process of protecting the borrower, which, he estimates, will help 72,000 borrowers raise $ 1 billion in debt repayment. Cardona’s secretary approved $ 500 million in debt repayment 18,000 borrowers who attended the now defunct ITT.

In addition, the Department announced that it is simplifying the forgiveness process for student borrowers with complete and permanent disability… And he stopped collecting for defaulted borrowers under the old banking system who is not eligible for suspension of federal student loan payments

The department has proposed to re-adjust on borrower protection in addition to other areas related to student loans and higher education in general. Many believe that a new rule is necessary after it has been changed under Secretary of State DeVos, which makes it much more difficult to get help for defrauded borrowers. More is expected from this this fall.



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